CHAPTER –
3
ECONOMIC
REFORMS IN INDIA SINCE 1991
PART - 7
WORLD TRADE ORGANISATION
ABOUT WORLD TRADE ORGANISATION:
* From January 1, 1995, WTO has been working.
* WTO was established with 104 members on 1 January 1995.
* Presently number of member country is 164.
* It was replaced the GATT, established in 1948 with 23 countries.
* India is the founder member of both GATT and WTO.
ROLE OF WTO
* The WTO acts as a permanent watch dog of international trade.
* WTO established a rule based trading regime in which nations can’t
place arbitrary restrictions on international trade.
* It focuses on facilitating international trade through removal of tariff
as well as non-tariff barriers.
* Providing a greater market access to all countries.
* To felicitates bilateral and multi lateral trade agreements.
THE OBJECTIVE OF WTO
(i) To enlarge production and trade of services,
(ii) To ensure optimum utilization of world resources,
(iii) To protect the environment.
WTO AGREEMENTS
1. Agreement on agriculture: This provides a framework for the
long-term reform of agricultural trade and domestic policies over the years to
come, with the objective of introducing increased market orientation in
agricultural trade.
2. Agreement on trade in textiles
and clothing (Multi-Fibre Arrangement): This provides for phasing out the import quotas on textiles
and clothing, in force under the Multi-Fibre Arrangement since 1974, over a
span of 10 years i.e., by January 2005 (as WTO was setup in January 1995). As a
result, quotas on textiles and clothing have now been abolished.
3. Agreement on market access: Member nations are required to cut
tariffs on industrial and farm goods in a bid to promote foreign trade and
provide better access to foreign competitors in their domestic markets.
4. Agreement on TRIMs: The Agreement on TRIMs Trade
Related Investment Measures calls for introducing national treatment of foreign
investments and removal of quantitative restrictions.
5. Agreement on TRIPS: Agreements on TRIPS (Trade Related
Intellectual Property Rights) imposed stringent conditions for the protection
of the intellectual property rights (IPRs). IPRs cover a variety of rights in
the field of patents, copyrights and related rights, industrial designs, layout
design of integrated circuits etc. These were included under WTO at the behest
of the developed countries which felt
that firms in developing countries were engaged in domestic production of many
goods whose patents, copyrights, etc., vested in the firms of the developed
countries.
6. Agreement on Service: For the first time, trade in
services like banking, insurance, travel, maritime transportation, mobility of
labour etc., was brought within the ambit of negotiations in the Uruguay Round.
The GATS (General Agreement on Trade in Services) provides a multilateral
framework of principles which should govern trade in services under conditions
of transparency and progressive liberalization.
EXPECTED GAINS– WTO AND INDIA:
1. Opening up international trade will help in the overall
expansion of world trade. India is likely to be benefit from this.
2. As per multi-fiber Arrangement, Indian cloths will flood
in US and European markets. Thus, exports will increase.
3. As per agreement on agriculture, U.S. and European Union
will reduce subsidy on agriculture. This will enabled India to increase its
earning from agriculture.
4. Strengthening of multilateral rules, ensure greater
security and create a more favourable environment for India.
EXPECTED LOSS – WTO AND INDIA:
1. In all negotiations, developed countries forced
developing countries to reduce trade restrictions and provide greater access of
their markets to developed nations.
2. As per against the expectation, U.S. and European Union
have not reduces agricultural subsidy and forced developing nations to
dismantle food security programmes.
3. Protection of intellectual property rights – patents,
copy rights, trademarks etc. to protect the interest of MNCs. Many products are
now not able to produce by developing nations as per patent rights.
4. Under single undertaking framework has been adopted which
required every members to accept all arrangements irrespective of its level of
development. Thus, the developing nations have not been given any additional
adjustment.
5. For instance TRIPS arrangements require all countries to
adhere with same IPRs standard which already achieved by the developed
countries.
6. WTO advocates free movement of capital but not the free
movement of labour. As free movement of capital helps to grow MNCs and free
movement of labour will benefit to less developed countries.
ACHIEVEMENTS
OF LPG POLICIES / GAINS
1. Rise in GDP growth:
GDP was only 3.5% per annum in 1951-1980.
GDP rose to 5.8% per annum from 1991-2000.
In 11th five year plan, GDP was 8.0% per annum.
Indian economy was the fastest growing economy in major economies of
world. Agriculture growth rate recorded a high in 2013-14.
Service sector witnessed a high growth rate 10.3% in 2014-15.
GDP growth in 2018-19 recorded 7.2% as compared to 6.7% in 2017-18.
2. Inflow of Foreign Investment:
Foreign investment was 100 Million U.S. $ in 1990-91.
It rose to 73.5 Billion U.S. $ in 2014-15.
In September 2014, FDI policy was liberlised, FDI inflow increases nearly
48%.
3. Increase in Foreign Exchange Reserves:
|
Date/Year |
INR (Cr. Rs) |
USD |
|
1991 |
6252 |
--- |
|
11.09.1998 |
123466 |
29048 Million |
|
24.03.2000 |
163645 |
37533 Million |
|
06.06.2014 |
1259840 |
279096 Million |
|
24.04.2020 |
3665786 |
479455 Million |
Gold: 32901 Million USD, SDRs: 1421 Million USD, Reserve position in IMF:
3570 million USD
4. Rise in Exports:
June 1991: 16.36 Billion
INR
March 2019: 1681.77 Billion
INR
5. Control on Inflation:
1991 : 17%
2011-12 : 6.9%
2015-16 : 5.28%
2017-18 : 2.9%
2019 : 3.44%
March 2020 : 8.76%
6. A check on Fiscal Deficit:
Approx 8.5 % in 1991
Approx 3.5 % in recent year
7. Increase in the role of Private sector
8. Consumer’s Sovereignty
9. Recognition of India as Emerging Economy
10. Shift from Monopoly to Competitive Market.
11. Rise in integration with the world economy.
CRITICISM OF LPG POLICIES / LOSS
1. Neglect of Agriculture:
Due to gulf between urban and rural economy, agriculture sector growth is
2.3% per annum. Slow growth of agriculture sector, hinder the growth process as
agriculture sector is raw material supplier, source of labour supply and demand
for industrial goods.
2. Growing Unemployment:
The situation is Jobless growth situation. Although there is an increase
in GDP but economy fails to create employment opportunities proportionately.
3. Ineffective Disinvestment Policy:
Undervaluation of PSUs / Assets
Disinvestment policy used for revenue, instead of development of Public
Sector Enterprises and infrastructure.
4. In-effective Tax policy:
Tariff reduction decreases revenue of government through customs.
Tax incentives attract foreign investment reduce the scope for raising
tax.
5. Growing un-equality / Unbalanced Growth:
Growth restricted with some sectors like telecommunication, hospitality,
real state, finance, travel, entertainment etc.
Foreign Trade Policy (2009-14) –
1. DEPB extended till Dec. 2010,
2. Relaxation in export promotion of capital goods,
3. Tax refund scheme for Jewellery sector,
4. Single window scheme,
5. Re-export of unused leather,
6. Export units allowed selling 90 percent of goods in domestic market,
7. Provision of dollar credits,
8. Addition of new markets and,
9. Zero duty under technology upgrade scheme.
REFERENCE VIDEO
New
Economic Policy / Economic Reforms 1991 – Part 7
(World
trade Organization)
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